Prospect, with a 5.49 percent stake in New City, is one of
its top shareholders and is waiting to see how buyers price its
distressed assets, as it could be a new benchmark to value
Japan's property transactions.

Prospect's chairman Curtis Freeze said the New City bidding
could be the start of finding the right direction as the rescue
package would help spur Japan's property transactions. The market
has almost halted in the past few months amid plunging property
prices and a dearth of new investments.

"When they announce a cap rate for New City and if they
announce that short-term debt will all be converted to long-term,
then that would be a big plus for the real estatemarket because
people would say 'OK, that's how things can be done'," Curtis
told Reuters in an interview.

"Once the cap rate (for New City) is set, then transactions
will come back because people would know how to price their
transactions," said Curtis, who leads Prospect's management of
just under $1 billion in assets.

Already, Japan's dwindling property market and banks'
tightening of lending has led a dozen property developers to
collapse. New City is so far the only REIT to fail but analysts
see a handful of others on the verge of danger as they face
difficulty getting refinancing agreements from banks.

Since hitting its peak in May 2007, the Tokyo Stock
Exchange's REITindex has lost about 70 percent -- wiping off
about 90 percent of net asset value held by Japan's listed REITs.

Meanwhile, Curtis welcomed the Japanese government's
readiness to rescue the country's battered property market,
pointing out Development Bank of Japan's entry into the bidding
for New City.

"The government is underwriting this property auction. We can
say New City is the first sign of Japan's property PKO (price
keeping operation)," he said.

Also suggesting the government's seriousness not to let New
City liquidate and to help bidding run smoothly, the Tokyo
district court has recently allowed informal meetings between
bidders and New City's major shareholders, which also include
Barclays Capital and Nikko Asset Management, said Curtis.

Curtis said to help spur Japan's property and REITmarket,
the government should do more by introducing drastic steps such
as injecting some $10 billion into the property market to help
restore investors' confidence.